BPCL, Kochi Refineries plan joint venture

The public sector companies Bharat Petroleum Corporation Ltd (BPCL) and Kochi Refineries Ltd have initiated efforts for setting up a joint venture company for distribution of gas in Bangalore identical to a similar venture in Kochi.

Speaking to presspersons here, the General Manager, BPCL and head of the Gas Task Force set up by both the companies, Mr M.J. Mohan, said, the equity in the joint venture would be held by the two companies along with the Gas Authority of India Ltd. The State Government, he said, would be offered a 5 per cent equity stake in the venture and the remaining would be offered to financial institutions. The company would focus on distribution of gas in Bangalore city, both to the domestic and the industrial sector.

Co set up in Kochi

A similar company had already been formed in Kochi he said, where the Kerala State Industrial Development Corporation has agreed to pick up a 5 per cent stake. However, for the Bangalore retail supply venture, the cost was estimated at slightly over Rs 600 crore, he added. This was in view of the large size of the customers.

Consequently, the requirement was also expected to be more than double that of Kochi. The estimated demand in Kochi is 2.4 (two point four) million standard cubic metres per day.

The gas transmission to Bangalore would be through a 600-kilometre pipeline in Kochi. The transmission line would have a spur at Kanjirikode, in Kerala, from where the gas would be diverted to Mangalore. The pipeline project was estimated to cost at least Rs 1 crore per kilometre.

Pact with clusters

Mr Mohan said the company has already signed memorandum of understandings (MoUs) with industrial clusters in both these regions for gas off-take. However, he said, "We have not mentioned any price to customers. It will depend on the price at which we can tie up supplies."

Gas supply is however expected to begin only by the first quarter of 2010, when Petronet LNG's terminal regassification station is fully commissioned in 2009. Mr Mohan said the Engineering Procurement and Construction contract for the 2.5-million tonne plant terminal was in the process of being finalised. The capacity is expected to be raised to 5 million tonnes per annum. In addition, he said, Petronet is in the process of finalising backward linkages including that of the liquefied natural gas from the source.

(This article was published in the Business Line print edition dated March 18, 2006)

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